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Energy Reform and Socio-Environmental Conflicts Regarding Hydrocarbons in Mexico

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Energy Reform and Socio-Environmental Conflicts Regarding Hydrocarbons in Mexico The Implementation of the Energy Reform and Socio-environmental Conflicts Regarding Hydrocarbons in Mexico Alberto Abad Suárez Ávila, Ph.D., Institute for Legal Research, Universidad Nacional Autónoma de México Prepared for the study, “The Rule of Law and Mexico’s Energy Reform/Estado de Derecho y Reforma Energética en México,” directed by the Baker Institute Mexico Center at Rice University and the Center for U.S. and Mexican Law at the University of Houston Law Center, in association with the School of Government and Public Transformation at the Instituto Tecnológico y de Estudios Superiores de Monterrey, the Centro de Investigación para el Desarrollo A.C. (CIDAC), and the Faculty of Law and Criminology at the Universidad Autónoma de Nuevo León. © 2017 by the James A. Baker III Institute for Public Policy of Rice University This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and the James A. Baker III Institute for Public Policy. Wherever feasible, papers are reviewed by outside experts before they are released. However, the research and views expressed in this paper are those of the individual researcher(s) and do not necessarily represent the views of the James A. Baker III Institute for Public Policy. Alberto Abad Suárez Ávila, Ph.D. “The Implementation of the Energy Reform and Socio-environmental Conflicts Regarding Hydrocarbons in Mexico” Energy Reform and Socio-environmental Conflicts Study Acknowledgements A project of this magnitude and complexity is by necessity the product of many people, some visible and others invisible. We would like to thank Stephen P. Zamora of the University of Houston Law Center and Erika de la Garza of the Baker Institute Latin America Initiative in helping to conceive this project from the start. We would also like to acknowledge the support received from Luis Rubio and Verónica Baz of the Centro de Investigación para el Desarrollo A.C. (CIDAC); Pablo de la Peña and Alejandro Poiré of the Instituto Tecnológico y de Estudios Superiores de Monterrey; and Oscar Lugo Serrato and Manuel Acuña of the Law School at Universidad Autónoma de Nuevo León. The collaboration between our institutions and the material and moral support were key to this project’s success. We would also like to acknowledge the logistical support and project coordination provided by Lisa Guáqueta at the Mexico Center, as well as the efforts of all of the authors that participated in this study and the many silent hands that helped put together workshops, events, and meetings related to this project. We also thank the peer reviewers, editors, style correctors, and translators, and Tirant lo Blanch. This study is dedicated to Stephen P. Zamora, our friend and colleague and one of the driving forces behind this project, who passed away before the completion of this study. 2 Energy Reform and Socio-environmental Conflicts About the Study: The Rule of Law and Mexico’s Energy Reform/Estado de Derecho y Reforma Energética en México The 2013 changes to the constitutional framework and the summer 2014 enabling legislation in Mexico’s energy industry represent a thorough break with the prevailing national narrative as well as the political and legal traditions of twentieth century Mexico. Mexico is about to embark on an unprecedented opening of its energy sector in the midst of important unknown factors, as well as a fiercely competitive and expanding international energy market. Mexico is one of the last developing countries to open its energy sector to foreign investment, and although there are important lessons that can be learned from other countries’ experiences, this does not imply that the opening will be necessarily as successful as the government promises or that the implementation of the new laws will go smoothly. Almost certainly, after the enabling legislation goes into effect, important questions of law will emerge during the implementation, and unavoidably, refinements to the legislation will have to take place. The book “Estado de Derecho y Reforma Energética en México,” published in México by Tirant lo Blanch and written in Spanish, is the culmination of a major research effort to examine rule of law issues arising under the energy reform in Mexico by drawing on scholars and experts from American and Mexican institutions in order to bring attention to the different component parts of the new Mexican energy sector from a legal standpoint. Study Authors Regina M. Buono Francisco J. Monaldi Gabriel Cavazos Isidro Morales Moreno Guadalupe Correa Cabrera Ana Lilia Moreno Josefina Cortés Tony Payan José Ramón Cossío Barragán Alejandro Posadas José Ramón Cossío Díaz Eduardo Pérez Motta José del Tronco Pilar Rodríguez Ana Elena Fierro Ferraez Luis Rubio Hector Fix Fierro Luis Serra Miriam Grunstein Alberto Abad Suarez Ávila Mara Hernández 3 Energy Reform and Socio-environmental Conflicts This essay addresses the transcendental energy reform in Mexico from a socio-legal perspective that analyzes the possible scenarios of socio-environmental conflict that may arise during the implementation process, which is currently underway, as well as the probable institutional responses. For such purpose, these reflections will focus on the hydrocarbons industry, the area which I believe will experience the greatest variation and concentration of social-environmental conflict over the short and medium term. The change of the regulatory paradigm for hydrocarbons is accompanied by significant transformations in the structure of the political and social environment in which the industry will operate. Previously, the state monopoly represented by the Mexican company Petróleos Mexicanos (PEMEX) operated in an environment that was mainly characterized by: a) a public discourse that promoted a development model based on oil dependency; b) public acceptance of the social and environmental impact resulting from the work of PEMEX; and c) PEMEX’s opacity with respect to its operations. Despite the fact that the socio-environmental conflicts related to energy matters in other Latin American countries have multiplied since the 1990s and continue until the present, the three characteristics listed above allowed PEMEX’s activities to have a low incidence and perception of scarce conflict. Within the context of a liberalized energy sector, it is noted that such characteristics will hardly be maintained; therefore, there is a higher risk of the emergence and visibility of socio-environmental conflicts. The distance that the State will maintain with respect to the new economic players, a public opinion that is more critical of the socio-environmental impact of energy and extraction activities, and greater transparency in the sector make it possible to foresee the emergence of a social context with greater conflict, which will bring Mexico closer to a scenario similar to cases in other parts of Latin America. The new legislation establishes some conditions to decrease risks, such as the inclusion of residents’ right to be consulted and compensated for the use of community land for extractive activities. Even in this manner, it is foreseen that Mexico will have to accept a future with greater socio-environmental conflict. It is predicted that, in addition to the traditional extra-institutional arrangements to resolve such conflicts and the expertise of the new players who will participate in the sector, an avenue for resolving conflicts through the judicial system will be created. Greater institutional autonomy with respect to the executive branch, a new constitutional paradigm guided by international human rights laws, the introduction of collective or class action proceedings, and the reform of amparo proceedings would make Mexican judges arbitrators of the predicted new socio- environmental conflicts regarding energy issues. Socio-environmental Conflicts in Latin America Latin America has a long history of conflict over natural resources. Control over the utilization of water, minerals, gas, and oil represents an economic, political, and social dynamic that defines the nations’ respective histories in a way that contrasts with occurrences in the northern part of the world.1 Since the 1990s, the discussion regarding 4 Energy Reform and Socio-environmental Conflicts the use of natural resources in connection with development in the region has taken on the form of socio-environmental conflicts. According to Guillaume Fontaine: “In the 1990s, the development of international and domestic law led to greater consideration of environmental protection and greater recognition of the rights of the affected populations. This phenomenon not only affected the practices of NGOs and other defenders of the environment, human rights, or rights of indigenous people, but also the policy of multilateral organizations and that of the State in Colombia and Ecuador. This development can be interpreted in one of two ways: that the NGOs played a decisive role in the change of the practices of economic players, or that the latter assumed a growing commitment on a social level, imposed upon them by public policies and the need to improve their image to reflect a ‘new corporate culture.’ Either way, this is the context within which the resolution of socio-environmental conflicts went beyond the social and community domain to make its way into the political and legal arena, both domestically and internationally.”2 Socio-environmental conflicts may involve the State, companies, communities, farmers, residents, and
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